There's nice tourism, and then sex tourism, such as in Thailand and Switzerland. The vast pharmacology industry is matched by a vast traffic in illegal drugs. The underside of waste disposal is the criminal dumping in the developing world of toxic wastes from the developed world. Military activities worldwide are fed by a huge gray market in weapons. Internet communications are undermined by floods of malware doubling every year. Among the commodities shipped around the world are exotic hardwoods, endangered species, blood diamonds, and stolen art worth billions in ransom. Illegitimate health care includes the provision of human organs from poor people -- you can get a new kidney with no waiting for $150,000 in places like Brazil, the Philippines, Istanbul, and South Africa. Far overwhelming legal immigration are torrents of illegal immigrants who pay large sums to get across borders. And money laundering accounts for 4-12% of world GDP -- $1.5 to 5 trillion dollars a year.

These are not marginal, "informal" activities. These are enormous, complex businesses straight out of the Harvard Business Review. The drug business in Mexico, for example, employs 400,000 people. A thousand-dollar kilo of cocaine grows in value by 1400-percent when it crosses into the U.S. -- nice profit margin there.

Stewart Brand

Stewart Brand is co-founder and president of The Long Now Foundation and co-founder of Global Business Network. He created and edited the Whole Earth Catalog (National Book Award), and co-founded the Hackers Conference and The WELL. His books include The Clock of the Long Now; How Buildings Learn; and The Media Lab. His most recent book, titled Whole Earth Discipline, is published by Viking in the US and Atlantic in the UK.

Nils Gilman

Nils Gilman is a consultant with Monitor 360, with a focus on national economic development and security. He has led projects on topics as diverse as the security implications of climate change, the culture of hackers, and the global narcotics trade. Prior to joining Monitor in 2006, Gilman spent six years leading competitive intelligence and product marketing teams at enterprise software companies such as BEA Systems and Salesforce.com.

Gilman holds a B.A., M.A. and Ph.D. in intellectual history from the University of California, Berkeley. He is the author of Mandarins of the Future: Modernization Theory in Cold War America (2003) and the forthcoming Deviant Globalization, an anthology that explores how globalized black market economies are challenging traditional state authority. He is also the co-editor of Humanity, an international journal of human rights, humanitarianism, and development, published by the University of Pennsylvania Press.

Hi, I'm Alexander Rose, the executive director at the Long Now Foundation. Every month wehave been trying to find a Long Short, a short film that exemplifies long-term thinking.They seem to be all coming in as time lapses at this point. But, this month we do have atime lapse, but it is a reverse time lapse. This was done by the folks at the Chicagofield museum, and it is of their site at the museum. It is several tens of thousands ofyears, I believe. Stewart Brand: Good evening, I'm Stewart Brand from Long NowFoundation. Was that a mastodon or a mammoth? I don't know either. If it is a mammoth wecan now re-create them with genetic engineering. Their fur has been collected from theice and DNA in there is attack, the idea is to collect some of that, blended withelephants, work it down until you have a mastodon embryo, mammoth embryo, bring it toterm in a lady elephant and they are back. Talk about running the clock backwards. Alsoin the bay area a couple of months ago was a meeting at UC Berkeley, I forget what thetitle was, but the subject was applied history. Basically, addressing the idea that whatif policy makers actually talked to historians when they made decisions. They talk toeconomists and get misled. They talk to themselves in terms of what they learned 40 yearsago in high school about history and imagine everything in it's terms either munich orman on the moon and one is to be avoided and the other is to be sought. But real life isseldom like that so they make bad decisions because they never talk to historians. So wehad a gathering of historians to think through what historians might bring to the policymaking process. One of those speakers will be coming later in the summer, Frank Gaven,talking about six ways to learn from history. And one of them is here tonight. NilsGilman was trained as an historian at Cal. I've work would not only in that conferencebut on many things that we have done at global business network. And what I think isexceptionally interesting, when people think about global business, after that matternetwork, they think about the thing you read about in the paper, the numbers are kepttrack of, you have a sense of, things are going up or going down. But it is sort of likeoverlooking the billion people that live in squattered cities and slums. And a few yearsago when Rob North came through and talked about squatter cities, it was like, wow, thereis another whole civilization scale metabolism going on out there that we are not takinginto account. Nils Gilman has something like that for you tonight. Please welcome him.NILS GILMAN: Thank y'all for coming. Well, in the interest of trying to contextualizethis talk, let me talk about a little bit where I came with these set of ideas from tobegin with. My first book which came out about seven years ago was intellectual historyof something called modernization theory. About the 1940s through the 1970s modernizationtheory framework that US foreign policy makers and foreign policy intellectuals used tothink about what they hoped they could achieve in what they call the third world, andtoday I'll be referring to as the global south. Modernization theory argued that the goaldevelopment both normatively and imperially was for other countries to essentiallyemulate the historical path of the United States. The idea was that if we encouraged eachindividual country to create a strong public goods providing, welfare providing,industrial democracy, this would eventually create an international community of likeminded states who would compete at a business level but would be bound together in anactualization of dream of perpetual peace. This was kind of the dominant idea about wheredevelopments was going during the first half of the Cold War. It is pretty obvious thisvision didn't pan out. All you have to do is read the newspaper to know that the globalsouth, much of the global south anyways the languish in poverty, oppression and in manycases conflicts humanitarian emergencies. Basically by the 1990s, when the Cold War wasover modernization at least as an official doctrine, had long since been abandoned inmuch of the world, and it had been replaced by what we now refer to structural adjustmentprograms which basically focused on downsizing social support systems, and this producedvarious forms of semi-permanent marginality relative to the industrial core of the globalnorth. That is sort describe in my first book. That marked that history from about the1940s through about the 1990s. After I was done writing that book, I was still left withsome nagging questions, which was what happens to people after they give up on the dreamof modernization or after the dream of modernization gives up on them? What happens whenpeople stop thinking their states, or at least trying to provide them with the frame workwhere they can work hard, keep their noses clean and get ahead? What happens especiallywhen people confront the realty like that in the context of increasingly globalizedeconomic system? I didn't have any answers to this. But this was sort of the lastquestion I was left with at the end of the book. So this was one set of concerns thatcame out of my academic interest. The second -- this set of academic questions thenmerged with another set of questions which had been really been the focus or a primaryfocus of my business consulting practice which deals with emerging security threats ofone sort or another. And Monitor 360, which is my outfit, we look at big intractablesecurity problems and we try to find new ways to conceptualize them, to reframe them,confront them, hopefully, solve them. We ask questions like the war on drugs. Failedstates. How they fit together? And what are the better ways to try and conceptualize therelationships between them? As it turned out as we were looking across one incident afteranother that has been taking place over the last 15-20, we saw at the root of many ofthese issues were trades and illicit commodities. This was true whether it was blooddiamonds or blood oil creating horrible civic conflicts in Africa, it was true if welooked at the war on drugs and the way that was providing a prop for regimes like theTaliban in Afghanistan back in the 1990s or the fork in Columbia, where the drug war wasgoing on in Mexico right now. We also looked at things like the sanction busting scandalsthat happened around Iraq and the UN oil for food program prior to the invasion of Iraqin 2003. And we even looked at things like evolution of improvised explosive devices inthe combat theaters of Iraq and Afghanistan and these things had been sourced, as many ofyou know, as the majority of coalition casualties over the last seven years. This is whatwe refer to as intractable problems or dilemmas. And we feel like the (inaudible). Inglobalization is one that really helps us make some sense of that. So these two streamsof thought came together a couple of years when I taught in the course I taught, with acouple of my colleagues at Berkeley, Steve Weber and Jessie Goldhammer, on the topic ofwhat I am now calling deviant globalization. What united all these extra legal commodityflows which unpinned so many of these current emerging security threats was theunsanctioned circulation of goods and services that either because of the way they areproduced or because of the way they are consumed violates someone's ethicalsensibilities. That course then prompted us to put together a book on the topics whichwill be coming in the fall, which consisted of a collection of essays written mostly byjournalists mostly academics that basically look at a variety of individual instances,and I'll be talking about most of these over the course of the talk today, whether it isthe drug trade or the sex trade or human trafficking or the global circulation of humanorgans or what have you. A series of articles coming out on that. But we also try, andI'm going to try to summary the discussion here today, to see whether there are emergingpatterns that we can find across these different illicit market places, whether there arecertain structural common patterns, in that, think of what it all kind of means in termsof global politics and the future development in the global south. That is what I'm goingto try to talk about today. So first, what is deviant globalization? Deviantglobalization in a word is the unpleasant under site of globalization. For everylegitimate industry that is out there, there's a deviant counterpart. Let me give a fewexamples. Tourism, obviously, this is a poster child for globalization. Something like a$300 billion a year industry, globally, and of course, there is a deviant counterpart toit. In the sex tourism industry, there is literally millions of men every year, and a fewwomen also, who annually try to places like Thailand to Jamaica to the Netherlands, toCuba, to the Philippines to enjoy sexual pleasures that are presumptively are unavailableto them in their home countries. Likewise you look at the pharmaceutical industry, thereis a deviant counterpart in the narcotics trade. Drugs illicit drugs, with possibleexception of oil, the single most globalized business in the world. Worth somewherebetween a quarter and half a trillion dollars a year. Waste disposal. It has a deviantcounterpart in what we may call toxic dumping. Sometimes illicitly, just as often legallyunder the guys of recycling, quote/unquote, global north ships literally millions of tonsof toxic waste battery, chemical, end of life merchant ships and so on, to the globalsouth, where it provides incomes for many of the people who find ways to reuse thesematerials but also causes massive physical and environmental insults for the countriesthat receive these goods. Just to give you a flavor for what I'm talking about, some ofyou may have heard of the Trafigura case, this involved an Anglo-Dutch company,Trafigura, which in the summer of 2006 had a ship cargo full of extremely toxic waste inone sort or another that it was trying to get rid of. This ship literally sailed all overdifferent European ports trying to find somebody who would take on these chemicals. Andthey were being told they would have to pay something like $100 million to take thesechemical and dispose of them legally in Europe. Needless to say, the company was not toopleased about having to pay that kind of rate, so what they did, was they managed to finda gentleman in Cote d'Ivoire who set up a shell company, and who offered to buy this fromthem for a million. So they sailed this ship down, in the dark of night, quite literally,unloaded all this merely on to barges in the port and sailed away. In the meanwhile, thisfellow took all this stuff and simply dumped it into the sewers and waterways. The resultwas not only incredibly horribly smelling mess, apparently the stuff that was in thiscargo hold is the stinkiest stuff in the world apparently there scientists out there thatmeasure stinkynism and this is the stinkiest stuff. So the whole city stank, but it wasextremely toxic. Over 100 thousand people had to seek medical assistance and, in fact,several dozen people died as a result of this. So that is an example of deviant wastedisposal. Then there's the military which takes the forms of arms trafficking. Armsdealing is needless to say the lynchpin of so many of the so called new wars that havebeen ruling much of the world from Afghanistan to Burma all across Africa. These weaponssometimes reach their recipients through black-markets but more commonly there is a kindof gray market that is going on here where militaries from nation states are interestedin supporting some rebel group or another, usually indirectly and by the way, a lot ofthese military officers are interested in making a dollar on the side, and so weapons offthe back of a truck and end up in the hands of some resistance group. And I think, mostof you will either remember or have read about the Iran contra-scandal back in the 1980s,classic example of this. US, Congress had said we couldn't support the contras directlyand so we sold weapons to the Israelis who shipped them to the Iranians who gave money tothe Israelis who Iranians who gave the money to the contras. So that they could fight aninsurgency against the regime in Nicaragua. Classic case of deviant globalization. Morerecent example, some of you may have seen the Nicolas Cage film, Lord of the War, whichwas a dramatization of the life -- well a loosely based on the life of the Ukrainian armsdealer Victor Booth who was probably the biggest single arms trafficker of the last 15years got arrested about a year ago in Thailand and he has been fighting expedition intothe U.S. ever since then. Then there is commodities. Commodities is obviously a lynchpinat the global economy, circulation of oil, metals, goods, and stuff like that but, italso takes deviant forms. This is partly illegally harvested commodities, but one of thethings that is worth thinking of specifically is exotic wildlife tracking which is a muchbigger business than what you might expect. Whether it is European wildlife collectorslooking to round out their collection of Komodo dragons, that would cost you $30,000 or$30,000 Chinese men looking for powdered rhinoceros horn, that is about $1,500 or SanFrancisco, interior designers who are looking to get you a better price on your Brazilianhardwood floor, there's a enormous industry in harvesting the circulating many specialtynatural goods, many of which are from highly endangered species or even or ecosystems. Infact, illicit commerce, this brings up a very important point about deviant globalizationwhich is that illicit commerce in otherwise legal commodities almost certainly dwarfs thesize of purely illegal market despite the size of the drug market. So trafficking underthe radar of goods like timber or oil, or minerals or diamonds these things are hugesources of illicit revenues for people in the global system. Perhaps one of the mostdisturbing deviant globalization deviant health care. So with the invention ofCyclosporin in the late 1970s and then being brought to market in the early 1980 said,Cyclosporin is basically a drug that suppresses the immune of rejection response fororgan transplants. All of a sudden organ transplantation went from something that wasunusual last ditch kind of procedure in 1960s and '70s, something that became verymainstream in the 1980s and 1990s. I suspect almost somebody in this audience who has atransplanted organ. Unfortunately, there's a huge gab between a demand for these organsand the supply of these organs. In most of the global north, organs are supplied fromcadavers and people have to be opt in to being a organ donor. The result is there is justnot enough organs relative to the number of people who are demanding organs. Of course,the demand for organs has increased steadily over the years as populations age, as theamount of hypertension patients age, and so there has been a steady increase in demandbut not much of an increase in supply. The result is many people languish many years on awaiting list, waiting on somebody to motorcycle crash so they can get an organ. But thereis an another option. As people get desperate, going through dialysis for many hoursthree time as week, four times a week it becomes a more and more reasonable option forthem to consider which is that you can fly today to a variety of places in the globalsouth and buy yourself an organ. Well you don't have to do it yourself, an organ brokerwill take care of it for you. And for about $150 thousand, you can get yourself a newkidney. The organ donor themselves don't get that much, they typically get 1-10,000 ofthose $150 thousand. Another thing that is interesting about the global circulation oforgans there is -- it is not a completely globalized market place. There are severalregional market places. So the U.S. most common place for U.S. organ donors or recipientin this market place to go is the Philippines and Brazil. The Philippines and the Brazil,they actually source their organs locally. They are local donors mostly. For theEuropeans, most popular place is Istanbul and South Africa. In South Africa they mostlyfly in Brazilians to be organ donors because Europeans are afraid of getting Africanorgans because of HIV, but there may be other reasons there. In East Asia it is adifferent market place. The focus there, there are a lot of organ transplant facilitatesin South Asia. Many in India, specifically, and they get a lot of their organs locally.There's also a lot of Chinese and Japanese businessman that go to the Philippines likeAmericans do to get these organs. There's a complex global network of these organ dealerssupplying and demanding these organs. Well there's also the software industry, obviously,another big globalized industry. I'll be talking about this a little bit more later. Butthe obvious, deviant counterpart to the software industry is the MALWARE industry. Standsfor malicious software, this is trogons, viruses, things that take over your computerthat steal your data personal data or turn your computer into a zombie so they can runspam and so on. Then there's immigration. Immigration of human trafficking. An estimated3-4 million people annually illegal immigrant from one country to another or at leastwithout formal license from one country to another. And these movements are facilitatedby a huge network of brokers and logistic professionals who for a fee will help move youfrom wherever you want to go to wherever else you want to go. So for example, todaypeople pay between 30,000 to 17,000 dollars to be moved from China to the United Statesusually through Mexico these days. They were coming through Europe until a couple ofyears ago. But Mexico is the main transition point. Some of the Mexican drug cartels sortof diversify their business by getting into the human trafficking thing. If you want toget from Cuba to the U.S. that would cost you about $10,000 which is actually the sameprice that a gang of Iraqis were charging to be transported from Baghdad to GreatBritain. So there's again, all sort of global networks brokered by people who are willingto make these things happened. And finally, most importantly there's the deviant financeindustry, otherwise known as money laundering. The reason why this might be the mostimportant industry is this is the industry that allows all these other guys who are doingthis illicit stuff to bring their money back into the day light. So basically, the sizeof the deviant finance industry is at least equal to all the other deviant industries puttogether. I'll mention this later, but estimates of the size of the money launderingindustry globally arranged range between 1.5 and $5 trillion annually. So that is between4 and 12 percent of GDP globally. So it is a pretty significant business. This is not anexhaustive list of deviant industries. There are many other illicit market places most ofwhich are thoroughly globalized. Another one that I just learned about recently is thatthe third largest illicit market place in terms of cash transfers and the third afterdrugs and human trafficking is the stolen art market. It is worth an estimated $10billion a year. There are whole law firms in the United States, UK and in France whosebusiness is focused exclusively discretely arranging the necessary ransoms to get yourstolen art back. Again, these guys don't want to publicize what they are actually payingfor these things, you need to look at the numbers skeptically, but it is a big, bigproblem. In addition, as I have kind of pointed out with some of these examples, a lot ofthese businesses are sort of overlapping. This great essay in the book that is coming outby Johnny Steinberg, South African journalist talking about the illicit abalone businessin South Africa. Abalone is a large tasty snail, a sea snail. It turns out it isparticularly considered a delicacy in south China. Unsure -- abalone furthermore, it isfairly tightly controlled -- it is easy to over fish abalone so it is fairly tightlycontrolled fisheries. In South Africa, it is controlled but not so much by the state. Butrather than by Chinese gangsters who basically control the abalone trade between southAfrica and (inaudible). What is really interesting about this is that it is not that theillicit abalone business but the way they pay for their abalone to the people who areharvesting the stuff in south Africa they pay them with crystal meth, which is producedin China. Then it fuels the huge drug problem in many of the townships and slums. That ina nutshell is what deviant globalization is all about. The main thing I want to leave youwith for this part of the presentation is that deviant globalization is not marginalphenomenon, it is a huge phenomenon. And by all indications it is rapidly growing. I wantto give you a couple of examples of some of the ways in which we know it is growing.These numbers also tell us a little bit about a nature of the trade. So let me talk aboutcocaine prices, this is kilo equivalent. In 1997 a kilo of cocaine in Peru cost about$650 that has dropped $250 a few years ago. These numbers by the way come from UN officefor drug control. Then after it gets ships for processing to Columbia it costs about onethousand dollars. Then once it is imported into the United States, it costs about$15,000-- now, again, all these numbers are continually dropping over time -- once it iswholesaled, in the United States, it goes up again, to about $21,000 and finally at theretail, street price of kilo cocaine once broken up into gram size packages, it goes forabout (inaudible). These are 2005 prices. You can see the numbers are generally decliningover time. Now, most of you may not be economists but generally speaking with prices aredeclining and demand as we assume it probably is for a commodity like this, thatgenerally means the supply is increasing. The other thing that I point out that isimportant to recognize, look at where the profit margin is highest. It is specifically atthe stage of importation. Why is that? That is because that is where that is the mostpressure on the supply chain from the narcotics regulators, the DEA. So the narcoticregulators they think they are in the drug eradication business, they are actually thedrug regulation business. And by increasing the risk for the people who are importing thestuff in, they increase the ability of those who stay in the business to demand premiumprices, and to actually raise the profit margins for the people who manage to survive inthe business. So if you are able to control that part of the business by say corrupting aborder agent and there's been 80 border agents in the last three years in the U.S. thathave been convicted of corruption of one sort or another, then you can make 1400 percentprofit margins. Some of you may not be business people but almost every business peoplein the world would kill for a business for a business with those kind of margins. Infact, these guys do. Another piece of data that is useful for getting a sense of thegrowth of this is the growth of MALWARE. These are new malicious code signatures, and newvariance of MALWARE in terms of thousands of cases, and you can see between 2003 and 2009there has been about 200 percent a year annual growth in the number of MALWARE cases.There is a lot of stuff that is going on with it. But a big part of this is where theseMALWARE cases are originating from. Increasingly, they are originating from the globalsouth. That's directly correlated to the fact that Internet adoption is increasinglyrapidly in the global south. If there is one thing that is almost an iron law, within 6to 18 months of a country getting a big fat broad band access, it is likely to emerge asa new hot bed of hacking. Now to paraphrase, Nicholas Negroponte who runs the media labat MIT, or used to run the media lab at MIT, a lab top for every child means a as hackerin every hut. Now, I could proceed with some more examples, but I think you get thepoint. I tend to be pretty skeptical a lot of statistics that we hear about deviantglobalization. Mainly because everybody who is involved in this has an incentive to lieabout the size of the these things. These last two sets of statistics, cocaine pricingand MALWARE signatures, criminals have to come out in the open to do their business soyou have some confidence that these numbers are pretty accurate. But a lot of the othernumbers are probably not particularly reliable. On the one hand, the deviant industries,themselves, do everything they can to remain out of sight if the state authorities oranybody else is really trying to measure on a consistent basis what they are up to. Onthe other hand, most of the state organizations that are in charge, or supposed to be inthe charge of paying attention to this stuff have a vested interest in both ofexaggerating the scale of the phenomenon and in exaggerating the scale of their successagainst the phenomenon so all in all, there is not a lot of confidence in the statistics.Because deviant globalization takes place in the shadows of the global economy andoutside of the purview of the state, generally speaking, the best way to try to get yourhead around this problem is to look at the ethnographic accounts. Some of this is done byjournalism, by academics, sort academics, and if you see the book, it reflects that.There is a series of books that I read just in the last couple of years that have reallyilluminated this idea for me Gomorrah by the Italian writer Roberto Saviano which is alsomade into a great movie that I recommend if you haven't seen, about the way the mop hasinfiltrated every aspect of daily life in that part of Italy. Then the Snakehead by thePatrick Radden Keefe which is a brilliant account of the dynamics of illegal Chineseimmigration. The New Yorker which is currently edited by David Rimnick who cut his teethon this 20 years ago when he wrote a book on the class of the Soviet Union which was ahotbed of Stage 1 deviant globalization. He's been having a whole series of writers doreally interesting stuff. One of the best pieces I read recently is by (inaudible) on theillegal timber trade in Siberia. And finally, I have to recommend Carolyn Nordstrom'sbook Global Outlaws which is an ethnographic account of what the war economy of Angola islike and how it actually works. It is a brilliant book. So these are the kind of sourcesthat I have used to get my head around this stuff. In addition to doing a lot ofinterviews when people are participating in these kinds of activities. So. What makesdeviant globalization possible? In a word, we do. You do. I do. The essence of deviantglobalization is moral arbitrage. Let me unpack that. Emile Durkheim, a Frenchsociologist, observed a long time ago, that societies are to a large extent defined andmade up of and defined by their taboos. That is by what they prohibit either morally orin the case of modern societies, legally. But in the globalized world economy, thefunctional effect of taboos and prohibitions and not so much necessarily to readiesdemand, so much as it to reduce supply in particular locations which in turn createsmarket opportunities. Moreover, the prohibition or their effective enforcement variestremendously from one locale to another, creating price gaps between different locations.Taking advantage of these kind of price differences for a given commodity between twodifferent market places represents exactly what economists refer to as arbitrageopportunity, an opportunity to make a market between two places where the places aren'taligned. This is precisely what deviant entrepreneurs are doing with respect to deviantcommodities. They are connecting suppliers in one lightly regulated or controlled marketplace to customers in a different more heavily controlled market place. Sometimes thatmeans moving the commodities from -- closer to the consumers. Drugs or what have you.Other times that means moving the consumer closer to the product. Sex tourism, the organtrade and so on. State regulations, and here is the key point, state regulations whichembody the moral inhibitions of the people they represent or at least some of the moralinhibitions of some of the people they represent, are the things that create theopportunities for the deviant entrepreneurs. Sex tourism only exists because people can'tget that kind of sex at home. Drug dealing makes the highest profits precisely wherepeople decide to -- where the regulators decide to put the most pressure. Or considercigarettes and boos. There are huge black markets on cigarettes markets grow in verystatistically measurable ways every time you increase the prices, the taxes on cigarettesand boos. There are huge businesses in eastern Europe, -- I mean, cigarettes in Europecosts 7, $8 a pack, they cost 40 cents to produce, so there is huge cigarettes smugglingbusinesses based mostly just outside the European union that basically supply between15-30 percent of the cigarettes to western Europe. Same thing is going on in the westernhemisphere, cigarette smuggling is a hot bed, one of the key industries in the tri-borderarea between Brazil, Argentina and Paraguay in South America, and a lot of thesecigarettes end up on the on the San Francisco. So here is a key point, it is our moralinhibitions, or our attempt to enforce them, inevitably enforce them unevenly thatcreates the opportunities for deviant entrepreneurs to make the money that they do. Now,I want to make a couple other points about the structure of this trade. Deviantglobalization is not identical to illicit trade. What really defines deviantglobalization is not so much whether it is legal or illegal, as what you might refer toas the yuck factor. Let me give you an example of that. A perfectly legal activity whichdefinitely is deviant globalization. Until 2008, the age of consent in Canada was 14. Itwas only raised to 18 a couple of years ago when the story that I'm about to tell becamea scandal in Canada. Turned out that 2005, 2006, 2007, there were all these men primarilyin border states in the United States, Minnesota, Michigan, New York, who were using chatrooms to meet 15, 14 year old girls from Canada online and arrange it to where they willgo meet them in hotels rooms in Toronto or Montreal or what have you in Canada. This wasobviously a way of getting around the underage sex laws in the United States and it wasperfectly legal, but also perfectly deviant. Same thing is going on right now, that haschanged because they have changed the laws in Canada. But the same thing is going onright now in the heart of Europe. Right now the age of consent for paid sexual relationsin Switzerland in 16. In Italy and France, it is 18, and in Germany, it is 21.Unsurprisingly, Switzerland, has emerged as basically, entropro for men who like sex withunder age girls, or young girls I should say. Has become a magnet for it. This is allover the newspaper. This is all over the newspapers in France. Second thing I'd say,deviant globalization is not identical to the informal economy. We shouldn't confuse itwith disorganization. Yes, it is run off the books and outside government oversite. Mostdeviant globalization enterprises, are anything but mom and pop shops. In fact, most ofthe participants in deviant globalization operate in large complex and carefully managedorganizations run by roofless entrepreneurs whose basic business strategies would befamiliar to any reader of the harbor business review. The big guys are constantly aretrying to increase their market share, they try to be number 1 and number 2 in everymarket they enter why the little guy seek monopolies. They work out strategies forcreating barriers to entry. They develop channel strategies so once they built the pipefor moving one kind of illicit commodity, why not pump all sorts of other illicitcommodities so those gangsters who start out by being cigarette smugglers during the1990s then became sanction busters against the sanctions against Siberia now become theprimary traffickers of women for sexual slavery in western Europe, taking poor women outof the poor villages in eastern Europe and Russia and bringing them across the borders inwestern Europe. Finally, they often leverage the information technology that, in 2million a Columbian drug lords house was raided, and they found in his basement amainframe that was being used to run the complex spreadsheet and future forecasting forhis entire business. I don't know where he got a consultant to run this thing, I guess,he wasn't the guy running it himself. But somehow managed to get this thing to run hisvery complex business. Now, I don't know want to exaggerate this, there is a lot of --lot of deviant businesses, not necessarily run with profit maximization as their focus.Political power, prestige, business stability, business continuity, these are oftenimperative things. But at the same time, the same exact thing is true of aboveboardbusinesses. The notion that all businesses are profit maximizing to the exclusion ofeverything else, is a completely. Everybody knows people make tradeoffs about work lifebalance. About what businesses they want to go into. These things are not just governedby profit motives but all other sorts of things. So, that in a nut shell is what deviantglobalization is. What I'd like to do next, is talk a little bit what deviantglobalization means. I have two propositions, each are meant as provocation. The firstthing I'd like to say, deviant globalization is development. Let me start by reading youa quote by Milton Freedmen which I think is quite telling, he said, "The black market wasa way of getting around government control, a way of enabling the free market to work, itwas a way of opening up, enabling people." Now, I'll confess. That quoting him in thisway, is a little bit shaky. But he is making a very important point for us. Which is thatdeviant globalization is not necessarily all bad news. If you like entrepreneurship,innovation, then you got to like deviant globalization. The guys who organize the marketsof deviant globalization are in many case brilliant innovators. They are constantlybuilding new businesses. They know how to thrive in the chaos of contemporary capitalism.All the clichs you read about, radical innovation, apply in spades to deviantglobalization. Second, and just as important, deviant globalization represents anextremely significant flow of money and resources from the global north to the globalsouth. There is a large amount of resources that come this way. Almost certainly, severalorganizers of magnitude bigger than the foreign aid that flows in the global north andthe global south. Almost certainly an order of magnitude bigger. This is a major way ofbringing wealth from the global north to the global south. What these two ideas suggestis that in a peculiar way, deviant globalization is enabling precisely the sorts of grassroots empowerment and non-dependency that have been calling for the last 60 years indevelopment. Let me give you another example to kind of frame this for you. There is anarticle in the Atlantic monthly that appeared in December, where he noted that theMexican narcotics industry currently employs 400 thousand people. Directly, employs 400thousand people. That is more than finance industry, that is more than the oil industry.That is more than every single industry except for tourism, and agriculture. This is amajor part of the Mexican economy. My colleague, who is the coeditor of the book, was inMexico a couple of years ago, he noticed that everybody in the village had a brand-newhouse, a colored T.V., and a satellite dish. He was a little surprised by this. Theseseemed to be poor peasants, who were just farming corn and what not. He started askingsome questions about where all this stuff came from. At first he got a lot of coldstares, not a lot of answers, finally, he was told to shut up and stop asking questions.This is a way that people can get rich, or at least stop being as poor as they werebefore. And this is also fully recognized by many of the states where this stuff is goingon. There is a number of states that have embraced deviant globalization as an explicitdevelopment strategy for themselves. Probably the most obvious example is way the sextourism has actively encouraged by a number of states in south East Asia. Thailand,basically, became a global place for sex in the 1960s when it basically offered to be thehost for American soldiers on rest and recreation for the Vietnam war was also known asintercourse and intoxication. And, this helped start the Thailand economy. A lot of moneycame in. It was a significant source of revenue. And many countries that are neighboringThailand are today emulating that same exact pattern, whether it is Cambodia, orPhilippines, these guys see themselves -- encouraging or putting up with sex tourism as away to jump start economic development. In some ways, this is not that different in kindfrom the way third world countries are happy to start a polluting factory in a way ofattracting investment and jump starting growth. Just the same way, it is basically, aquestion of whether you want to accept physical pollution or a kind of social and moralpollution. So beyond the states in question, deviant globalization also represents thepersonal enrichment strategy for those who participate in the trade. I don't want to saycoercion is not part of the equation, for those who participate in the trade. I don'twant to say that coercion is not part of the equation in many cases, it is certainly is.But the majority of the cases, people who sale their organs or become a drug mules, ordecide to have a few middle age foreigners, aren't doing it because they are forced butbecause it is the fastest, best, easiest way to make a dollar and it is better thanstaying back in the village. So from that perspective, deviant globalization can be seenas a survival strategy of the weak. To say this again is not to deny the awfulness of theexploitation and the oppressiveness that in many cases deviant globalization represents,for the line workers within deviant enterprises but simply recognize it with rareexceptions. Most of the participates, child prostitutes aside, have some degree of agencyin this. Becoming a wildlife smuggler or a drug runner, or an organ donor is a choice. Itis not a very pleasant choice but are you go sure it is a worse choice than becoming acoal miner in China? Every week on average more people die coal mining in China than diedin that mining accident in west Virginia last week. So let me step back now and talk alittle bit about what the back story to deviant globalization is. This returns to thethem I started with, my dissertation, which I then turned into a book. Which was aboutthe failure of why that book referred to high modern development schemes. Getting intothat is a topic for another day. But I have to provide a brief thumbnail in order to makethis make sense here. High modernism refers to economic development as a process thatgovernment spear head-on behalf of their populations as a whole and that aims to create abroadly inclusive set of public goods around health security, education healthcare soon.From the point of view of the global south the Cold War was from one perspective a debateabout whether communism or liberal capitalism offered better prospects for buildingprecisely such prosperous, public goods providing welfare states. Now diverse economicstrategies as we all know, were attempted, were tried in order to realize this dream.Collective ownership of the means of production in communism countries, laissez-faire,import substitution, industrialization, export led growth and diverse political programswent along with this. What almost all of these strategies have in common with a fewexceptions in each Asia is that they failed. Communism failed most spectacularly butagain for a few countries in the pacific realm, capitalism didn't do much better for mostof those countries during most of this period. Not in terms of headline growth, not interms of poverty reduction, not in most measures of human development that is measured bythe united nations. When communism died in 1899 what died was not just the particularcollectivist economic system and authoritarian politics of the soviet union andsatellites, cremated along with that corpse was the broadly public civic mind of notionof development as the central defining responsibility of the post colonial state. Whatarose in instead in the 1990s, was what can be known as the Washington consensus. Now theWashington consensus represented the dominant neoliberal economic program for the globalsouth during the 1990s as promoted by the IMF and the U.S. government Harvard economists,Dani Roderick, is has defined it this way. He says, "stabilized, privatized, andliberalized, became the mantra of a generation of (inaudible) who cut thirtieth in thedevelopment world and of the political leaders they counseled." Wasn't hard to understandwhy this particular view of what the state should or shouldn't be doing made sense. Itwas not hard to point to the undeniable corruption, the inessentials, the rent seekingand predatory behavior of many post colonial states in the global south. Andneoliberalism had a solution that definitely addressed those problems. It sought todismantle these states by slashing public bureaucracies, foreign aid, trade barriers, andso on. Where such programs were successfully imposed, which includes, almost all of LatinAmerica, much of south Asia, much of Africa, it led to what might in a nutshell may becalled the hollowing out of the state. What I mean by hollowing out you still have inthese places, the physical and institutional infrastructure of a state. You still havethe capital building, you still have representatives that go to the European union, youstill have a constitution that this that and the next thing is supposed to go on. But theactual capacity of those states to deliver anything like what they had been saying totheir people they were supposed to be delivering, whether they were delivering a not isanother story. The actual capacity to deliver those things really went away in a way thatwas a real signal difference from the way things were being run from the 1950s into the1980s in most of these states. And the post Cold War hollowing out of these states hadtwo really critical results both of which are -- you can't understand why people inglobalization have without understanding these two results. The first one is the deviantglobalization signal unmistakably, to the individuals in this country that you are onyour own. The end of the promise of the state building and building states to providepublic goods or rather perhaps more accurately the revolution that those promises hadalways been empty, meant that people had to strike out on their own. The result was aglobal unleashing of what we might call survival entrepreneurship. Throughout the globalsouth and above the all the formal communism states which previously lacked any legaloutlets for that kind of behavior. Here it is again, I mentioned David Remnick cuttinghis teeth on the history of the way the Soviet Union and the economic system is going onthere. There is a reason why Eastern Europe emerged as a real hot bed of epicenter ofdeviant globalization in the 1990s, and that is because the only people who hadentrepreneurial skills in the late 1980s who were able to develop them in the Communismregime were people who were illicitly doing things that were illegal. You had to alreadybe a A-moral person in order to develop the kind of entrepreneurial skills that would beabsolutely required in the post-shock therapy, post-neoliberal, post-Washingtonconsensus, versions of the states that were going to operate in. So it was absolutelyinevitable, read rim nicks book from 1991, he spells it out. It is absolutely inevitablethat the people who are going to take over the economies in these places are people whoare criminals. That's at the elite level. At the grassroots level people had the samekind of choices to make the economies were collapsing, people did what they had to do tosurvive. If that meant becoming sex workers, or organ sellers or narcotic dealers orwildlife smugglers, they did that. This is what they had to do to survive, so they did.The second and equally important impact of the hollowing out of states at the end of aCold War, was that it largely dismantled the regulatory capacity of states in the globalsouth. In other words, tossed out, with the (inaudible) was much of the practicalcapacity to enforce any kind of border control or other kinds of legal regimes, this toolibrated the force of globalization obviously. It basically turned the global south intoa smugglers paradise. This borderless world of the global south was in many ways is areturn to the premodern order of fragmented sovereignties, judicial ambiguities,jurisdiction ambiguities, localized governance. There's still a state that is sittingthere, but those guys, in many cases are not people who are running anything thatactually matters on the ground in most places in the global south. So what does all thisadd up to? From one perspective deviant globalization, can be seen as the failure ofmodernization and development. From another perspective, it can be seen not as a failureof development but rather as actually existing development. I use that phrase carefully,some of you may remember is meant to be an ironic echo of the old soviet phrase thatSoviet Union represented actually existing socialism. This was meant as a putdown to allthose western socialists who said no that is the perverted version of socialism, that isnot real socialism. We have a different vision of it. The soviets said no, no, no. Wehave actual existing socialism, don't listen to what all those soft-head liberals in thewest who think their socialists, actually know what socialism mean. So likewise, equatingdeviant globalization with actual existing development is meant as an invitation to judgedevelopment not by the vision statements but forth by the world bank or the IMF or theGates Foundation, but rather by its actual results. Just actually existing socialismrepresents a perverse realization of socialisms promise of equality so deviantglobalization represents the kind of perverse realization of capitalism of personalliberty. To the same extent that Soviet oppression represented, and told us somethingvery fundamental and very disturbing about the dream of socialism, deviant globalizationtells us something very fundamental and very disturbing about the dream of capitalism.Simply put deviant globalization is what you get when you combine massive socioeconomicinequality, moral lumpiness across global landscape and the technologies of globalizationthat bring all that together. What that enables of the rapid of movement of people ingoods. None of these elements are likely to be reversed over time barring some reallyunexpected exhaustion of shock. So I would summarize by saying deviant globalization isnot a correctable operation. It is not some perception to the rule of globalization. Itis not a marginal feature of the system. It is the system. Second major proposition I'dlike to make about why deviant globalization matters, is deviant globalization iscreating a new class of political actors Whose geopolitical importance is only likely togrow with the underline resource streams that they are in control of. Just like theclassic high modern state that I was talking about earlier, was supposed to create acertain class of actors namely a welfare public goods providing state, deviantglobalization is creating a different class of geopolitical actors. What my friend JohnRob refers to in his blog as "global gorillas." In what sense would people like thepeople in this picture by the way these are gorillas, men movement from the emancipationof the Nigerian Delta, they steal oil basically -- they take the oil that is being pumpedout of their swamp by western oil companies and hold it for ransom, or up those pipelinesif those companies won't pay them more money and so on. In what sense are these guyspolitical actors? Well, as we have seen, deviant entrepreneurs are controlling large andgrowing swats of the global economy. And they have this control basically outside of thepurview of the state. States have estimates how big they are, but have no control overit, no ability, they can sort of shape the flows but they can't really dictate the size,or dictate exactly who are going to be running these things. There's no sort of veryefficient regulatory for deviant globalization. These actors also because they work inextra legal market places, will the non-insignificant quota of violence and force. Thatis sort of an occupational hazard if you are going to run extra legal business. You haveto be able to adjudicate contracts and courts aren't going to help you there. And finallythese deviant entrepreneurs, and this is what is really interesting, many of thesedeviant entrepreneurs are beginning to provide privatized versions of the same kinds ofpolitical goods that states used to say they were in the business of providing. Let meexplain what that means. These private actors are beginning to provide things like healthclinics, infrastructure, personal security justice of a rough sort, to the localcommunities in which they operate. They build parks. They build medical clinics. Theysometimes even build schools. Now these are not things that are open to the public. Theyare open to their particular constituents, the children of the people who run theirbusinesses. These are all company towns if you will. No such thing as public goods forthese guys. But, they are providing the kinds of goods that create political loyalties inthe consumers of these goods so if you are getting your clinic and your road, and yourjob from guys like this, are you going to be more loyal to these guys, or to the robberbarons. It is pretty clear, where your loyalties are going to lie. The thing I want toemphasize these guys are not nice people, generally speaking. It is important torecognize, that these guys, these political entrepreneurs, are both the cause and aneffect of state hollowing out. And they are a threat to the state as classily understood.But they are resolutely not revolutionary actors. Revolutionary actors sought to capturethe state, they wanted to control the state because they wanted to deliver those kinds ofgoods and services to their constituents. They had a very different kind of agenda. Theseguys, people like these two, this big drug dealer in Columbia, the arm and the armsdealer I referred to earlier, the guy on the right, these are much more typical of thesort of counter actors that deviant globalization produces. What they don't want to do,they don't want to state over the state. It doesn't have very good functions. You have toattend boring meetings in Washington and New York. And then you also have to provideservices to people you don't care about. They would much rather provide services to thepeople who are a part of their communities as they define them. Here I'm thinking ofgroups like the Modi army in Baghdad or the first command of the capital which is aprison gang in Brazil or the drug cartels in Mexico. These guys are all challenging thestate de facto but except when they all directly challenged by the state, they don't goover the state. They do sometimes get in direct conflicts with the state, but usual onlywhen the state initiates the conflicts. A couple of years ago, the first command of thecapital shut down South Palo for three days, cartel shut it down by staging attacks onthe police stations. The reason they did that because the government decided they weregoing to try to break up the communications network that the drug kingpins were all inthe jail were putting together. These guys ordered a hit taking out on the state forthree days. South Palo State was shut down. South Palo State, should be noted has aquarter of all the industrial production of South America. So they basically shut down aquarter of South America for three days. This was because the state initiated theconflict. Likewise the bloodbath that is eternally taking place in the northerner Mexicois a direct result of the new president coming in late 2006 and saying stop. There was alot of violence going on between the drug gangs competing over turf, but there wasn't alot of violence directed citizens. The reason why things like what happened in(inaudible) where a party full of teenagers were just machined gunned for no reason isthat these gangsters were trying to tell the government, if you keep messing with us, weare going to start taking it out on your constituents. It is only in these contexts thatthese guys usually directly confront the state. They prefer to sort of undermined thestate, make the state be weak to carve out zones of autonomy for themselves so they canrun their businesses, make their money. And they are not generally interested in directlyunder minding the state but de facto they end up functionally zapping the capacity, thelegitimacy of the state because they are replacing the state de facto and functionally.This is a picture from South Palo by the way. You'll notice by the way, that big poolwith swimming lanes, these guys each need to have their own pool on their balconies.These guys are All right though. What I'd like to conclude with is some thoughts aboutwhat all this tells us about the future of the world's economic system, the worldpolitical system. I think deviant globalization has basically two really interestingthings to tell us about that. It contradicts the two most dominate narratives about theglobal south that have predominated in American foreign policy thinking, in publicdiscourse over the last 15-20 years the first one of those discourses are the kind ofliberal view put forth by people like Tom Freedmen, back in the 1990s for instance,Francis Fukuyama said that we were headed for that modest's vision of liberal states. Hesaid we are going to have economic growth, the world is going to become flat, everybodyis going to get rich, it is going to be great. We are going to end up with this world,this vision of perpetual peace. Sort of liberal dream of what international relations canbecome is one dominant narrative. It is pretty obvious, the ways in which deviantglobalization challenges that particular narrative. Rather than creating a flat world ofwhat we have seen as entrepreneurs are actually interested in creating a lumpy world thatthey can then turn into huge profits for themselves. Deviant globalization is notcreating -- globalization in generally therefore deviant globalization is not creating aflat world but rather creating a world with huge disparities where there are actors thatare perfectly happy with that state of affairs and are perfectly happy to challenge thestates in (inaudible) ways rather than directly. States are withering away, hollowing outin the global south. But the notion that these guys are going to be coequal partners insome international comedy of high capacity liberal states all of which are equallyfunctional is something like a bad joke. So that is probably pretty obvious way in whichany knowledge contradicts one kind of conventional wisdom about the global south. Butwhat I think is more interesting actually is the way that deviant globalizationcontradicts a different narrative about the global south. That is a much more dystopiannarrative that has been put forth by a number of people. This usually goes-- the personthat really kicked off this rhetoric back in the 1990s was the journalist Robert Kaplanin an essay that appeared in the Atlantic called the Coming Anarchy. He basicallydepicted a world, a future where there were two world. The zone of order, the globalnorth where things were going to be great. Cold War was over, we weren't going to have toworry about the bomb coming down on our head, and we were all going to get rich and havelots of trade. But then the other world. The zone of anarchy, which of course, most ofthe world. Here was a situation of failed and collapsing states, of horrible new diseasesof terrorists, of new wars of genocides; and much of the 1990s, Kaplan looked like avisionary. People saw what happened in the Balkings, people saw what happened in Rwanda,and the culmination Kaplan's vision seemed to take place on September 11, 2001 whenterrorists sitting in one of these zoned of anarchy type places in Afghanistan managed toaddress plan and launch an attack which killed 3,000 people in Washington and New Yorkcity. But I think deviant globalization has something important to challenge in thisvision. This might seem surprising. The point about deviant globalization, that this isnot about disorder. It is actually very much an orderly process that deviantglobalization creates. It is just not a liberal order that it is creating. It is acreating a illiberal order. These are places from the point of view from Washington orLondon look like ungoverned zones, are in fact, usually very governed, just not governedby states or the kinds of people that we like. They are governed by people who havenarrow minded interests, they don't have the notion of the public, they have traditionalvalues, but are really backward, horrible prejudices of one sort or another. These arepeople who are providing order for their communities. And I was having conversation withStewart before this talk about Somalia, northern Somalia, is in many ways one of thebetter off places in Africa. They have the thriving business, piracy. They have a verygood infrastructure system, a very dense cell phone network, probably better than thecoverage we get one on one. We get people who provide order and justice. It is not verypleasant if you are a woman, and not very pleasant if you are adulter, not very pleasantif you don't want to worship Mohammed, but those things aside there's a certain orderthere for sure. And it is wrong to think as these places as a zone of anarchy or a failedstate. These are not failed states. Failed states, the concept of a failed state falselyimplies the normative order that everybody in the world wants to aspire to is a liberalstate like something like the dominant model that most western states have striven afterfor the last 350 years. That is not what these guys want, and they are providing a verydifferent kind of order. And they are learning to live in a world outside liberal states.So finally, what can we do about all this? I think, again, there might be a couple ofchoices that we often hear. One option that we sometimes hear is that we simply need toshut globalization down. This stuff is horrible. What we need to do, we need to endglobalization. Go back to autonomists nation states. They call for capitalism to berestrained. And in essence for the plan to return to the long lost ideal of unitarianhomogamous nation states. Several things to be said about this. First of all, I actuallygive globalization. I like traveling, I like the things it brings me cultural,economically, and so on; but aside from my personal preferences, this is not going towork. Why isn't it going to work? What did we just learn about deviant globalization?Deviant globalization, deviant entrepreneurs love it when people put up trade barriers.That is how they make a profit. The more people try to pull back from globalization, themore this is going to create -- for exactly the deviant entrepreneurs to be the onlypeople who are benefiting from globalization. I think a very telling example is NorthKorea. We think of North Korea as the ultimate hermit kingdom, the closed society. And itis those things. Does that mean globalization has no impact on north Korea? Well peopledon't have cell phones. They have famines every 10 years or so. They have don't getquality T.V. like we do. But they do have some aspects of globalization. For example,they are the number one producer globally of counterfeit dollar bills. Also, currentlysupposed to be the number one source of black market nuclear technology. They are alsomajor producer and exporter of opium and heroin. So in other words, when you try to closeyourself off the only kind of globalization that you get is the deviant kind. I don'tthink this is going to work. I don't think it is a realistic option. I actually thinkthat trying to pull back is going to make the problem worse rather than better. So theother sort of extreme, people sometimes propose when they hear this kind of lecture. Iswell, we should just legalize it. Get rid of all these barriers. These are just sillymoralisms, we should just give up the ghost, and let everything be permissible and getrid of this. I have to say, I have somewhat more sympathy with this kind of view becauseat least realistic about the economic incentives that under pit the system. But I alsothink is unrealistic, just as unrealistic as the first one is about economics, this isunrealistic about the nature of people's social systems. As I quoted him earlier,societies are defined in large measure by the set of things they prohibit. I think mostof us, maybe we say, okay, we think marijuana should be legalized, more may be evencocaine and heroin, and do you really most of us think that parents should be allowed tosell their children to sex slaves? Or that northerners should be allowed to dump theirtoxic waste all over the global south? Or that countries should be allowed to completelyrape their natural environments just because they happened to have some U.N. border drawnaround this particular plot of land? I think most of us think there has to be limits. Andthere always will be in any event, even if you as an individual completely given up allmoral limits. So I don't think that is a particularly realistic option. I think, the onlything we can do, is two things. We can make judicious choices. The first thing we have todo actually, is we have to recognize the structural nature of this phenomenon. And nottry to run away from it. Not try to think it is going to away. We have to embrace thefact that this is the realty of the system. Once we do that, this forces us into a seriesof not very pleasant, but at least clear choices. We have to decide what do we worryabout more? A million people in jail for nonviolent drug offenses? Or our moral theinhibitions about drug use? A blood northern Mexico or moral inhibition about drug use?Our desire to see countries in the global south be able to develop any way they want anddumping of toxic chemicals by northern countries and allowing them to do anyway theywant. These are not easy choices, actually. I don't want -- I think most of us fall oneway or the other, on these things. These are not easy choices. The main point I wouldleave us with, at the end of this, what deviant globalization tells is that these noteasy choices are not going away. We are going to have to confront them and stick with theinpropretuity (sp). Thank you very much.